State pension receivers and pensioners of all kinds are set to struggle this Christmas as coronavirus continues to impact incomes across the economy. According to new research from SunLife, more than 300,000 grandparents could end up spending more than they can afford on their grandchildren this year.
SunLife’s research showed grandparents are set to spend £104 on each grandchild this Christmas, which, with an average of four grandkids each, is £416 in total.
The bills could be even higher than this as one in five grandparents (19 percent) detailed they planned to spend £150 or more on each grandchild, which works out at least £600 in total.
While grandparent’s hearts may be in the right place, these plans could be creating more harm than good.
Additional insight from SunLife showed on average, grandparents over 50 have a monthly income of £2,083, and after all essential and non-essential expenses are paid have just £249 “left over in spare cash.”
Simon Stanney, an equity release director at SunLife, commented on this: “Our research shows that 28 percent of over 55s don’t have private pensions, of those that do, just 22 percent are still paying in regularly.
“And now we know that 16 percent of them have either stopped or reduced their payments because of the crisis.”.
For grandparents specifically, it was revealed as many as 31 percent of them do not have a private pension.
Additional research from SunLife, Which again surveyed 3,0000 over 50s, found that grandparents believe their state pension will be the biggest contributor to their retirement when compared to private pensions (92 percent for state pensions, compared to 63 for private.)
However, grandparents may be hit by an unexpected expense in their later years, as many over 50s explained they will look to inheritance to fund their lifestyles.
While this all sounds worrying, analysis from Becky O’Connor, the Head of Pensions and Savings at interactive investor, revealed there could be some optimistic changes coming for pensions next year.
In looking at potential policy changes coming in 2021, Becky highlighted the following possibilities:
- The Pension Schemes Bill is set to receive Royal Assent. The main principles of the Bill are to increase regulatory powers to protect people from pensions scams, to act on climate change through pension investments and to enable the long-awaited pensions dashboard.
- The DWP is likely to publish further updates on its consultation on how to make annual benefits statements for workplace pensions simpler to understand.
- We can expect the Pensions Regulator to update on its work to tackle scams.
- The possible introduction of measures to encourage retirees to review the amount they hold in cash relative to investments.
- The Government could look to reduce the minimum age for auto-enrolment to boost the level of private pension provision.
- The Government could explore the ability to access pension benefits earlier for those who are out of work and unable to work in the run-up to state pension age.
- The Government could choose to make National insurance contributions payable by people past state pension age who choose to continue working.
- A focus on how to boost the pension savings of self-employed people, which may have suffered further during the pandemic.
While many people in their later years may be hesitant to tackle their pension woes, Becky urged savers to take action sooner rather than later.
Becky concluded: “It’s never easy to get your pension near the top of your to-do list.
“But doing so just once this year could reap dividends later on in the form of thousands of pounds saved on fees or gained in investment growth.
“Put that way, sorting your pension could be the most lucrative bit of admin you ever do.”